Manufacturing In The Digital Economy: 3 Opportunities That Could Reinvent The Entire Industry

Marc Hibschenberger

Manufacturing in Digital EconomyAfter years of recessions, tightening of government regulations, changing trade policies, and an increasingly fickle customer base, could 2016 be a pivotal year for manufacturing? Government leaders across the world seem to think so. Whether it’s by leveraging Germany’s Industry 4.0 program, the U.S. “Revitalize America Manufacturing and Innovation Act,” India’s “Make in India” initiative, or another plan, they are relying on the industry to uplift the economy towards opportunity and prosperity.

If the digital economy has its way, the moment may soon come when manufacturers can stop simply surviving and start thriving and expanding again. However, this is only possible if manufacturers realize what opportunities lie ahead. Unfortunately, many do not. According to the Economist Intelligence Unit (EIU) study “Hyperconnected Organisations: How Businesses Are Adapting to the Hyperconnected Age,” nearly half (49%) of manufacturing executives do not view hyperconnectivity as a vehicle for revolutionary or significant change.

To me, this finding is quite surprising considering the industry’s history with sensors and mechanisms enabled by the Internet of Things. Does this mean that manufacturers are focusing only on digital trends they know and understand, rather than looking ahead and seeing what’s emerging? Possibly.

Beyond automation and efficiency: what manufacturers stand to gain

Sensors monitoring machinery performance. RFID tags tracking the movement of product from the shop floor and warehouse to the retailer and even the customer. For the most part, these common applications have improved operational efficiency, process automation, and visibility into past events. But this is only the beginning of what hyperconnectivity can deliver.

By embracing the full power of the digital economy, manufacturers can overcome the three most common barriers to growth and expansion.

  1. Growth in both existing and new markets. It’s quite obvious that hyperconnectivity has made it easier to enter new markets. Digital startups seem to pop up and make a name for themselves virtually overnight. And now, more established market leaders are starting to take the same approach. EIU found that executives have used digital channels to diversify their partner network (38%), sell into new categories (38%), and launched digitally exclusive offerings.
  1. Working with suppliers. In the EIU study, 38% of executives are finding that hyperconnectivity is a great aid for accessing and managing international suppliers. By creating a network of every supplier in all corners of the world, the digital economy enables buyers to be more selective about their supplier partnership (39%) and extend the range of materials and services purchased through the supply chain (27%).
  1. Developing and delivering product and services customers want. People of all walks of life are empowered to provide feedback in social media and other Internet-based channels. As a result, this one trend is impacting all aspects of the manufacturing enterprise. More than half (51%) stated that products and services are becoming increasingly tailored to individual customer needs. This requires a concerted effort to integrate customer information into product development processes and the ability to build an integrated view of a globally diverse base.

To explore a how manufacturers can realize the full potential of the digital economy, download the EIU case study “How Hyperconnectivity Is Reshaping Tata’s Global Manufacturing Base”.


Marc Hibschenberger

About Marc Hibschenberger

Marc Hibschenberger is the Marketing Manager of Internet of Things at SAP. His specialties include demand generation, project management, cloud computing and CRM.

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